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India faces piquant situation at WTO

LiveMint 04-05-2017D Ravi Kanth

Geneva: India faces a piquant situation at the World Trade Organization after two South American countries—Argentina and Brazil—used New Delhi’s proposal on trade facilitation for services (TFS) as a basis for discussing a “WTO Instrument on Investment Facilitation”—a proposal to which India remains opposed, according to people familiar with the development.

As India presents its TFS proposal formally at the Doha negotiating group on services Wednesday, it could face awkward reminders about what would be its stance on investment facilitation, which is being pushed aggressively by China, Pakistan, Brazil, Argentina, Russia, Hong Kong (China), Mexico, Nigeria, Colombia, Korea, and Australia, among others.

Three countries—the US, India, and South Africa—have firmly opposed any discussion on investment facilitation at the G20 meeting of Trade and Investment Work Group in Germany more than two months ago. Subsequently, the US said in a communication on 11 April that “regarding investment, the US does not support moving forward with the draft deliverable or any alternative package on investment facilitation”.

The US said it “does not believe that G20 TIWG (Trade and Investment Working Group) negotiation of detailed policy prescriptions in this area is necessary or helpful at this time, nor that the TIWG should seek to prioritize policy actions in certain areas of investment over others, including with respect to which issues should be on the agenda of separate bilateral, plurilateral, and multilateral negotiations.”

Despite the firm opposition from the US, several countries are pressing ahead with their proposals for commencing negotiations on investment facilitation, seeking to launch negotiations at the WTO’s 11th ministerial meeting in Buenos Aires later this year.

Significantly, in a restricted proposal circulated on 26 April, Brazil and Argentina have called for a WTO instrument on investment facilitation on the lines of “India’s initiative on services facilitation – as expressed in documents “Concept Note for an Initiative on Trade Facilitation in Services”, “Possible Elements of a Trade Facilitation In Services Agreement”, and “Trade Facilitation Agreement for Services”.

The three Indian proposals, Brazil and Argentina argued, “further added momentum to current informal discussions on investment facilitation, as such initiative encompasses the supply of services through commercial presence (mode 3).”

“From a public policy perspective,” according to Argentina and Brazil, “there seems to be no reason for Members to adopt or adjust institutional and regulatory measures to facilitate investment in services only [as proposed by India] and not investments in general.”

“Therefore, serious consideration should be given to the establishment of common framework encompassing investment facilitation in general, that is, in both services and goods,” Argentina and Brazil argued in their joint paper.

India and South Africa have argued at the G20 that investment agreement or investment facilitation can never be part of the WTO framework on grounds that it would undermine their “policy space”. The US had also opposed investment facilitation, saying there can be only rules for investment but not facilitation, according to a trade envoy who asked not to be named.

A group of eight countries—Argentina, Brazil, China, Colombia, Hong Kong , Mexico, Nigeria, and Pakistan—under the banner Friends of Investment Facilitation for Development have directed Argentina’s trade envoy, ambassador Hector Marcelo Cima, to coordinate the discussion on “the role that the WTO could play as a forum to discuss measures that Members could take to facilitate investment.”

“Given the increasing inter-linkages between trade and investment, their mutually reinforcing role in fostering global development and inclusive growth, and the growing interest in this area in the WTO,” the sponsors underscored the need for furthering “the discussions on how the WTO could contribute to facilitation for cross-border investment, with the ultimate aim of promoting more inclusive trade and growth for its Members, especially developing and least-developed Members.”